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China's first private shareholding bank has opened in Shenzhen, a southern city designated as a special economic zone.

The official Xinhua news agency said the Shenzhen Development Bank will be responsible for its own profit, losses and risks. It will accept savings deposits and extend loans to collectively owned businesses, non-governmental institutes, leaseholders and private entrepreneurs, the report said.

Xinhua said last May and June that the bank's predecessor, the Shenzhen Credit Bank, sold shares worth 8 million yuan, or about $2.1 million, to 7,000 people and 100 state and collectively owned firms. State-run enterprises hold 50% of the shares.

China is trying to reform its rigid banking system by promoting competition and allowing banks more freedom in issuing bonds and loans. The nation's first semi-independent multiservice bank, the Communications Bank of Shanghai, went into business in 1987.